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Korea Fair Trade Commission

The Problem

Prior to the establishment of the National Consumer Counseling Center, consumers did not have enough idea where to receive counseling services and did not fully trust consumer counseling agencies (e.g. Korea Consumer Agency (KCA) and consumer organizations) due to different responses given. Consumers also did not have access to information on consumer protection and safety issues before and after signing a contract, and there were no measures which could be taken when in dispute with a business. Consumers living in non-Seoul (non-capital) areas had to pay long-distance calls to receive counseling services from the KCA. Besides, the KCA needed to address the long call wait time.
On the part of consumer counseling agencies, even though the daily average number of counseling cases handled was three-fold higher for the KCA compared to consumer organizations and local governments, the KCA encountered difficulty in hiring new counselors. Education in consumer agencies was not provided for new recruits, including re-education for existing ones. Moreover, counseling information could not be effectively shared due to the separate operation of counseling channels (hotline numbers and websites) for each agency. The quality of counseling service provided differed depending on manpower and material resources available.
Issues from a national perspective, government need to devise measures to quickly and fairly resolve consumer complaints and damages based on the right to obtain proper compensation for damages sustained due to use of goods and etc, one of the eight consumer’s rights in accordance with the Consumer Framework Act. In addition, there were not enough consumer counseling service providers nationwide despite the pile-up of telephone counseling cases and sharp increase in online counseling. There was also a need to set up an integrated system in order to provide standardized counseling services and develop practical consumer policies.

Solution and Key Benefits

 What is the initiative about? (the solution)
The National Consumer Counseling Center operates on a single-number hotline (1372) and consumers are automatically forwarded to representatives of counseling service agencies across the nation. The Center provides a variety of information related to consumer protection and shares counseling information using a standardized database system through participation and cooperation among the KCA, consumer organizations and local governments.
The Center has received 1,445,414 counseling cases totally, 732,560 in 2010 and 712,854 as of November 2011. The call success rate stood at 82.8% in 2010 and 92.0% as of November 2011 compared to 38% in 2009 when the KCA solely handled telephone counseling cases. Of note, 19 cases led to recall recommendations, improvement recommendations and safety warning issues.
The Center is the world’s first one-stop service provided (counseling-remedy for consumer damage-alternative dispute resolution) based on private and public sector cooperation. The Center enabled the provision of quality counseling service by setting up a database system comprised of counseling cases handled by consumer organizations and the KCA which could be utilized by other relevant consumer centers and groups. More than 45,000 exemplary cases have been set up and provided them for consumers on the website.
The Center gathers counseling information which is entered into an integrated database to be shared and utilized by counseling agencies and policy authorities, which in turn has enabled the development of effective measures to prevent consumer damages such as issuing warnings by region and problem.
Consumer counseling agencies scattered across the nation used different phone numbers which was a huge inconvenience on the part of consumers. Through the single-number system, inbound calls are being forwarded to counseling agencies with representatives on standby which has hugely reduced complaints on long wait time. Also, local call rates are charged which is cost-efficient.

Actors and Stakeholders

 Who proposed the solution, who implemented it and who were the stakeholders?
The proposal was made by the Korea Fair Trade Commission (KFTC), which is a ministerial-level central administration organization under the authority of the Prime Minister and also functions as a quasi-judiciary body. The KFTC formulates and administers competition policies, and deliberates, decides and handles antitrust cases. The Ministry of Finance & Economy transferred the consumer policy function to the KFTC in 2008 following the government’s organizational restructuring. Since then, the KFTC has been administering consumer policies aimed at strengthening consumer empowerment.
The KFTC decided to set up an integrated consumer contact center (ICCC) through integrating consumer counseling systems in order to better educate and inform consumers according to the <2009-2011 Fundamental Plan for Consumer Policy> which was developed and announced at the 2008 2nd Consumer Policy Committee meeting (October 1, 2008). Also, the KFTC set out to establish a consumer counseling center in 2009 to promptly and efficiently provide counseling services and handle consumer damages according to the <2009 Consumer Policy Action Plan> which was deliberated and decided at the 2009 1st Consumer Policy Committee meeting (March 13, 2009).
In line with need for integrating consumer counseling systems, the initial plan was to set up an integrated system over a two-year period from 2009-2010 by investing KRW8 billion, but the period was shortened to one year by investing KRW6.5 billion and the system was opened on January 4, 2010 for pilot operation.
The Korea Consumer Agency (KCA) acted as a supporter. KCA is a government-funded public agency established in 1987 (in accordance with the Consumer Framework Act) and operates under the authority of the KFTC. In line with the KFTC’s consumer policy, ‘customer-oriented service’ was chosen as one of the top 7 mid-term management goals of the KCA for 2009-2011 and ‘improvement of customer interests’ was chosen as one of the 15 strategic tasks to achieve goals.
The National Consumer Counseling Center opened its service in 2010 and the KFTC entrusted the KCA to operate the center’s information technology infrastructure. The KCA organized a specialized team to operate the system efficiently and results get reflected in employees’ performance reviews, in order to ensure sustainable system management.
Local governments have focused efforts toward strengthening protection for rural consumers by establishing local consumer centers; however, such efforts were not enough given the lack of budget, manpower and expertise compared to the central government. There are ten consumer organizations which are members of the Korea National Council of Consumer Organizations provide consumer counseling services in respective offices across the nation, and organizes the voluntary dispute resolution committee to resolve consumer damages related to door-to-sales and multi-level marketing.
Given that local governments and consumer organizations operated their own counseling systems and database systems, they were against participating in the integrated consumer counseling system. Accordingly, the KFTC and KCA visited local governments and consumer organizations nationwide to encourage their participation.

(a) Strategies

 Describe how and when the initiative was implemented by answering these questions
 a.      What were the strategies used to implement the initiative? In no more than 500 words, provide a summary of the main objectives and strategies of the initiative, how they were established and by whom.
-With different counseling agencies nationwide using different numbers, a survey found that 85% of consumers were willing to use a nationwide single-number service. The Center operates a single-number (1372) in which calls are forwarded to representatives of respective consumer organizations and local governments across the nation.
-Complaints related to long call wait time raised the need to efficiently allocate inbound calls. Depending on the call wait time, the Center allocates calls to respective counseling agencies through dividing the calls first by area of counseling and then by area code.
-Counseling agencies adopted different policies and procedures, had different working environments and showed gaps in capacity among counseling representatives. The Center requires cases to be handled within seven days from the day calls are received pursuant to the Civil Petitions Treatment Act.
-Consumer issues are disputes that occur between a consumer and a business so resolution itself depends on the two parties. The Center adopted a voluntary consumer complaint management system so that businesses can prevent complaints and provide prompt remedies. The system forwards complaints filed online and the Center receives the results from businesses via counseling representatives, and then consumers are notified.
-Regular training was provided but only a few times and evaluation systems were not adequately in place, which called for an integrated training program and uniformed evaluation system. The Learning Management System (LMS) was introduced to provide self-study materials for counseling representatives to save time and cost burdens. Key Performance Indexes (KPIs) for counselors were developed so that counseling agencies can perform quantitative and qualitative evaluations on counseling representatives and so that coaching can be provided based on the evaluation results.
-Counseling representatives had to enter information onto the counseling system due to operation of separate computer and telephone systems. The Center adopted the CTI technology so that information related to consumers and type of counseling services can be automatically provided to counseling representatives when calls come in, thereby improving efficiency and reducing time.
-The Center operates an automatic counseling system so that consumers can search counseling information required to self-resolve complaints. The system operates all year round, 24 hours a day so consumers can search adequate solutions in the website.
-Counseling agencies separately managed cases which caused inefficiencies and increased complaints on counseling service due to weaker pace of productivity. A standard counseling process was developed to improve expertise in counseling services. Counseling representatives and consumers can access the database via the counseling system and the Center’s website.
-The Center used the Managed Contact Service (MCS) to efficiently allocate calls utilizing existing land line instead of a private line. Use of the Computer Telephony Integrated (CTI) technology sent counseling and recorded information to the central system on a real-time basis, ensuring the safety and credibility of counseling services.
-The Center’s system is linked with that of the KCA and the Anti-Corruption & Civil Rights Commission so that complaints can be handled via a one-stop service. The Virtual Private Network (VPN) was adopted to save cost and maintain security to prevent personal information leakage.

(b) Implementation

 b.      What were the key development and implementation steps and the chronology? No more than 500 words
Local governments, consumer organizations and the KCA succeeded in developing an innovative cooperative system to more efficiently carry out consumer policies through sharing of counseling information.
The period for system building was initially set for two years (2009-2010) but was completed in just one year so as to provide faster service for consumers. Business Process Rebuilding (BPR) and Information Strategy Planning (ISP) was first completed (March ~ June 2009) followed by establishment of the center’s system (July ~ December 2009), pilot operation (January 2010) and official system opening (February 5, 2010).
The Center’s IT infrastructure was introduced to minimize the use of infrastructure and manpower. The National Consumer Counseling Center is the first in the world that uses a single-number (1372) and single-system.
Initially, eight consumer organizations from the Korea National Council of Consumer Organizations participated but two more has joined in July 2010, which in turn helped to provide consumers with easier access to counseling service.
The Korea National Council of Consumer Organizations is a federation of consumer protection organizations created to encourage sound and autonomous activities of consumers and to defend the interests of consumers. Its purpose is to support member organizations to effectively achieve their intended goals. Eight member organizations participated in the National Consumer Counseling Center upon opening (Green Consumers Network in Korea, Korea Federation of Housewives Clubs, National Council of Homemakers Classes, Korea Consumer Education Center, National Council of YMCAs of Korea, Korea Consumer Affairs Institute, Korea Women’s Association, National YMCA of Korea) and two others joined later on (Citizens Alliance for Consumer Protection of Korea, Consumer Unions of Korea).

(c) Overcoming Obstacles

 c.      What were the main obstacles encountered? How were they overcome? No more than 500 words
On the part of local governments and private consumer organizations, there were concerns that the integrated system was ‘invading’ the area of consumer counseling services being offered via their very own systems. Of note, the Consumers Union of Korea and Consumers Korea pointed out that the new counseling center will dampen voluntary consumer campaign activities and integration of database systems will strip away intellectual property rights.
In order to address such concerns, the KFTC and KCA visited local consumer centers and held presentations that underlined the purpose of the National Consumer Counseling Center-setting up a nationwide consumer counseling system based on public and private sector cooperation. Efforts were also made to encourage cooperation from consumer organizations by gathering feedback through business consultations with the Korea National Council of Consumer Organizations.
The Virtual Private Network (VPN) was used to reduce costs related to integrating consumer counseling representatives scattered across the nation. In order to prevent leakage of personal information, all counselors are must pass VPN before entering Case Handing System. The Center’s website is also highly protected so people who want to join the website should present authorized certificate or i-PIN (Internet Personal Identification Number) to authenticate them.
The Consumers Union of Korea and Consumers Korea expressed interest in participating in the National Consumer Counseling Center on April 2, 2010. In cases like this where additional participants come forward, the KCA visits the respective counseling agencies to set up the case handling system and educate them on how to use the system.

(d) Use of Resources

 d.      What resources were used for the initiative and what were its key benefits? In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. Describe how resources were mobilized
The period for establishing the integrated counseling system was shortened from two years to one year during which KRW6.5 billion (approx. US$5.6 million) was invested. During this period, there was resistance from local governments and consumer organizations. After continued negotiations by the KFTC with interested parties and persuading them to change their positions, the integrated consumer counseling system was created in which joint participation comes from the KCA, 17 local governments and 10 consumer organizations. More than 1.4 million counseling cases received since the center’s establishment in 2010 has laid the footwork for performing various consumer protection activities. Of note, consumer counseling statistics have been provided to relevant bodies including the KFTC, Anti-Corruption & Civil Rights Commission, Seoul Metropolitan Police Agency, Ulsan Metropolitan City, Gyeonggi Provincial Government, Jeju Special Self-Governing Provincial Government, Jeonnam Provincial Government, Chungbuk Provincial Government, Incheon Metropolitan City, and Busan Metropolitan City.
Efforts toward utilizing the accumulated counseling information involve the information strategy planning (ISP) in 2012 to set up a data warehouse in which the counseling information can be processed and used, and encouraging consumer counseling agencies to utilize the online analytical processing (OLAP) system so that consumer protection activities can improve using the compiled counseling data.

Sustainability and Transferability

  Is the initiative sustainable and transferable?
Consumers have the right to obtain proper compensation for damages sustained due to use of goods and etc. according to prompt and fair procedure (Article 4 of the Consumer Framework Act), and the central and local governments should take necessary measures to promptly and fairly handle consumer complaints and damages (Article 16 of the Consumer Framework Act). The UN General Assembly Resolution (A/RES/39/248) describes that the responsibility for sustainable consumption, such as providing adequate consumer information and effectively resolving consumer disputes, lies with the state itself.
Actions will be taken to ensure the sustainable development of the center such as diversification of service channels (e.g. telephone counseling system for foreigners, e-mail response management system), development of support measures to promote voluntary handling of consumer damages by businesses, sophistication of counseling database system, establishment of the interactive voice and video response (IVVR) system for consumers with disabilities, and setting up a customer relationship management (CRM) system between the center and consumers via utilizing the data warehouse.
The National Consumer Counseling Center is a collective entity which provides a wide range of consumer counseling services that adhere to consumer policies. This type of center can be introduced in other countries through the turnkey-based method; of note, an effective consumer protection system be set up with minimum burden on developing nations as part of the Official Development Aids (ODA).

Lessons Learned

 What are the impact of your initiative and the lessons learned?
The National Consumer Counseling Center received 1,445,414 counseling cases over the past two years since its establishment in 2010, thereby becoming the nation’s representative consumer counseling channel. This would not have been possible without the complementary and cooperative relationship between interagency working for consumer protection.
The number is to continuously rise when considering roughly 3% of the population (48,580,293 people) in 2010 received counseling services.
Establishing the Center provided a more focus-oriented and convenient work environment for participating counseling agencies and helped strengthen work coordination among consumer organizations, local governments and other related consumer protection groups. Of note, the Center could support private consumer organizations to self-resolve consumer issues.
The consumer counseling cases are a starting point dealing consumer issues to KFTC, hence this is very innovate progress to integrate, gather, and accumulate cases as compared with Consumer Direct in United Kingdom or Consumer Hotline in Japan. What the Center wants to furnish counseling services is not certain physical space but broadband and landline. The simple ways which the consumers remember are easy hotline number (1372) and website address (www.ccn.go.kr).
The Center succeeded in gathering consumer counseling cases - a collection of information related to consumer issues - across the nation. It also enabled consumers to resolve problems on their own using the sophisticated automated counseling system and database system.
In order for the center to act as the nation’s representative consumer counseling channel, the database needs to be continuously upgraded and actualized through consumers’ collective intelligence. In addition, steady resource investment is called for to promote quality assurance in consumer counseling services.

Contact Information

Institution Name:   Korea Fair Trade Commission
Institution Type:   Government Department  
Contact Person:   Young-jin Oh
Title:   Deputy Director  
Telephone/ Fax:   +82-2-2023-4305
Institution's / Project's Website:   www.ftc.go.kr
E-mail:   oyoungjin@yahoo.com  
Address:   217 Banpo Dae-ro, Seocho-gu
Postal Code:   137-966
City:   Seoul
State/Province:  
Country:  

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